See which lenders will give you the best chattel mortgage. Instant online results.
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Borrow from $5,000 to $500,000
Fixed or variable interest rates
Repayments to suit your budget
Terms from 1 month to 5 years
Secured & unsecured options
Own a business and have an ABN
Business is GST-registered
Permanent Citizenship or Residency
Minimum business-operating time of six months
Can provide business bank statements
A chattel mortgage is a type of finance used by sole traders and businesses predominantly for the purchase of a vehicle, often due to the significant financial advantages it offers over a standard car loan.
To qualify, the vehicle must be used at least 51% of the time for business.
Chattel mortgages are a fixed-term finance contract with a fixed interest rate, most similar to secured car loans but for business customers.
This means the vehicle or vehicles you purchase will still act as security for the loan, but your business can immediately take advantage of the tax benefits of ownership.
If you are approved:
A lender will provide the funding needed to purchase the vehicle.
You will purchase the vehicle and take full ownership and responsibility.
You will make regular repayments to the lender for a fixed period of time.
The lender will register a mortgage over the asset.
Chattel mortgages are required to be registered similar to how a lender secures a home loan by registering the mortgage on a property.
Under this arrangement, you or your business will own the vehicle and assume full responsibility for it as an asset.
If your business is registered for GST on a cash basis — i.e. it records business income and expenses as and when they occur — it can claim the GST on the initial purchase price of the vehicle as an input tax credit on the first Business Activity Statement (BAS) following the establishment of the chattel mortgage. If you’re taking out a chattel mortgage:
The vehicle becomes an asset on the business’s balance sheet
You can claim the initial purchase-price GST back on your next BAS
You can claim depreciation on the vehicle in your tax return
A balloon payment can help reduce your repayment amounts and maintain business cash flow
All interest is tax deductible
In the case of depreciation, there is a maximum amount for vehicles, which is set each year by the Australian Tax Office.
The cost limit on vehicles was $57,581 for both GST and depreciation during the 2019-2020 tax year. The maximum amount of GST claimable during that year was 1/11th of the cost limit — $5,234.00.
The cost limit on vehicles is $59,136 for the 2020–2021 financial year for both GST and depreciation. The maximum amount of GST claimable is 1/11th of the cost limit — currently $5,376.00.
You will also be responsible for the vehicle’s operating expenses for the duration of your chattel mortgage term, including:
As the vehicle is a business asset, you could claim a tax deduction for the above operating expenses. If the vehicle is used for both business and private use, however, you will need to assess the percentage that you are claiming as business use.
For sole traders, a chattel mortgage can provide significant benefits not available under most other forms of car finance.
As the vehicle is being used largely for business purposes, you may be able to claim some or all of the interest and depreciation costs as tax deductions as well.
Chattel mortgages are commonly used by companies looking to purchase heavy machinery — such as transport truck and trailer combos, delivery trucks, excavation machinery, and other mining equipment.
Vehicle finance brokers operate all across Australia, and can help you compare the best available options for chattel mortgage.
They may often charge a small fee for their services, but you can find a broker to help you choose and apply for a chattel mortgage anywhere in Australia — Sydney, Perth, Adelaide, Brisbane, Newcastle, Melbourne, Canberra, or anywhere else in Australia you may be located.
Deposits and trade-ins
Although you won’t be required to put down a deposit in most cases — and lenders will generally finance 100% of the asset price through a chattel mortgage — you can certainly place down a deposit to lower your monthly repayments if you wish to.
If you have an existing vehicle you will be trading in, you can use the trade value of your old vehicle to purchase the new vehicle, which will also reduce the amount borrowed and, therefore, your monthly payments.
Chattel mortgage balloon payments
Balloon or ‘residual’ amounts are essentially lump-sum repayments due at the end of the loan term.
Chattel mortgages can be set up to include a balloon amount, which results in lower scheduled repayments at the cost of a higher final payment.
This is often the case when a business wants to conserve cash flow at the time of taking on the chattel mortgage.
Otherwise, the business may choose to pay off the vehicle without a balloon and simply own the vehicle once the loan is repaid.
Important: This is a hypothetical calculation as an illustration of how balloon payments affect monthly repayment amounts.
Options at the end of the term
At the end of a chattel mortgage, you or your business will need to pay the balloon payment — if there is one — and you will have a few options:
Refinance the balloon amount and retain the vehicle.
Repay the balloon with funds at hand, and retain or sell the vehicle independently.
Trade the vehicle in and purchase another with a new finance agreement, repaying the balloon amount in the process (generally using the proceeds from the trade-in).
Anyone wishing to finance a vehicle predominantly for business purposes can apply — the vehicle must be used within the business at least 51% of the time.
This makes them ideal for tradies and other business owners who want to finance a vehicle primarily for work, but still drive it around on the weekend as well.
As a chattel mortgage is specifically designed for businesses, you can apply if you’re:
A sole trader — i.e. tradie — financing a vehicle predominantly for business use
Self-employed and an ABN holder
Financing a company car or fleet as a business asset
Financing industrial vehicles or machinery for business use.
Lender approval criteria will vary, though provided you can supply the appropriate documents and have a good credit history, you’ll likely be approved.
If you’re buying a vehicle to the value of $150,000, most lenders will offer a chattel mortgage if you:
Have been in business 12 months; and
Have an ABN; and
Are registered for GST; and
Have a clean credit history
Are currently renting and can provide a 20% deposit; or
Own a home.
If you’re looking to finance a vehicle greater than $150,000, or have been in business less than 12 months, you may still be able to apply for a chattel mortgage.
If this is the case, you’ll need to provide additional documentation to the lender so they can better assess your application. Here are some tips to improve your chances of getting approved:
Demonstrate the ability to service your equipment loan or lease.
Understand the lender's approval criteria
Have an ABN
Be registered for GST
Have an acceptable credit rating
Have a minimum amount of existing debt
You'll also need to supply all your supporting documents, such as:
Proof of identity
Financial records (provided by your accountant)
Profit and Loss Statements
Details of the asset you wish to purchase
Business bank statements.
Rates notice (if you own a home).
Rental agreement (if you are renting).
Chattel mortgages in Australia offer greater benefits for businesses than many other kinds of finance, and are suitable for all kinds of businesses wishing to purchase company vehicles or machinery.
Allows a business to finance a vehicle if it is used for business purposes 51% of the time.
Uses the financed vehicle as security.
Allows the business to benefit from ownership of the vehicle immediately.
May include a balloon payment to lower monthly repayment costs.
Is generally set between 2 - 5 years.
Generally has lower rates and fees than other forms of vehicle finance.
May include early repayment or termination fees.
Offers GST, depreciation, and tax-deduction benefits on a vehicle.